KVIG Informative

Nevada cannot draw more water from the Colorado River than the law promised it in 1928. For nearly a quarter-century, the state has worked around that ceiling by paying a neighboring state to hold water for it underground.

The arrangement traces to July 3, 2001, when the Colorado River Commission of Nevada and the Southern Nevada Water Authority signed an interstate water-banking agreement with the Arizona Water Banking Authority, according to a U.S. Bureau of Reclamation decree-accounting index listing the contract’s history. The deal let Nevada pay Arizona to store Nevada’s unused Colorado River apportionment as underground credit, recoverable later during a shortage.

The mechanics run through a separate Storage and Interstate Release Agreement among the United States, acting through the Secretary of the Interior; the Arizona Water Banking Authority; the Southern Nevada Water Authority; and the Colorado River Commission of Nevada, according to the agreement’s own text, published by the Bureau of Reclamation. The Arizona Water Banking Authority stores water in underground basins and groundwater-savings facilities authorized under Arizona law, then records long-term storage credits for Nevada at the Arizona Department of Water Resources. Nevada draws on those credits later by developing what the agreement calls Intentionally Created Unused Apportionment — water Arizona agrees to forgo so Nevada can take more from the river in its place.

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The agreement caps Nevada’s ordinary banking at 200,000 acre-feet a year and 1.2 million acre-feet total, on top of a separate 50,000 acre-feet of credit left over from a 1992 and 1994 demonstration project, according to the agreement’s text. Nevada’s annual recovery of that banked water is capped separately, at 100,000 acre-feet a year and 1.25 million acre-feet overall. The agreement runs through June 1, 2050, unless the underlying banking deal ends sooner.

Arizona and Nevada amended the agreement three times. The first amendment, dated Jan. 1, 2005, added a financial guarantee: Nevada agreed to pay Arizona $100 million as security for the banked water, according to the Arizona Water Banking Authority’s own published account of the amendment. A second amendment followed on April 1, 2009, and a third, on May 20, 2013, dropped Arizona’s own obligation to keep accruing credits toward the 1.2 million acre-foot cap, the same account states.

By the Arizona Water Banking Authority’s own count, Nevada had banked more than 600,000 acre-feet of credit through 2019 — water that exists only as an entry in an Arizona groundwater ledger, available to Nevada only if it calls the credit in. The authority itself was created by the Arizona Legislature in 1996, under Laws 1996, Chapter 308, originally to manage Arizona’s own Central Arizona Project water; interstate storage on Nevada’s behalf began in 2005, according to a 2022 Arizona Senate Research Staff brief on the authority.

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Nevada still holds the smallest guaranteed share of the Colorado River’s lower basin, a fact the banking agreement does nothing to change. What the agreement changes is how much cushion Nevada has when the river fails to deliver what a century-old compact assumed it would carry — and that cushion sits across the state line, inside Arizona, governed by Arizona’s own water law.

The credit Nevada has built up in Arizona is not water Nevada controls outright. It is a claim, backed by a 2001 agreement and three later amendments, that Arizona will hand over an equivalent amount if Nevada calls it in. As the Colorado River basin’s seven states work out the operating rules that take effect after 2026, how much of that Arizona-held credit Nevada can actually draw on, and how fast, is still being settled in the same paperwork that created it.